Ad-sales slump leads to weak quarter for WebMD

Softer revenues from portal advertising and services led to a double-digit revenue decline for WebMD, the company said.

Revenue declined 20% to $112.7 million during the quarter, from $141.4 million in the prior-year period. Behind the dip was a 23% drop in public portal advertising and sponsorship revenue, to $93.7 million compared to $121.1 million in the same quarter last year, and a 7% slide in private portal services revenue, to $18.9 million vs. $20.3 million in the year-ago quarter.

The dreary second-quarter earnings report followed the company's announcement last week that it was reducing its financial guidance for the rest of the year. “The company anticipates that many of its customers will continue to reevaluate expenditures in various areas, including marketing expenditures across their entire product portfolios,” it said in a statement.

WebMD's new CEO, ex-Pfizer exec Cavan Redmond, joined the firm in June after his predecessor, Wayne Gattinella, left in February amid flagging ad sales and an aborted plan to sell the company. (Click here for MM&M's profile of Redmond.)

The firm continued to chalk up advertisers' apprehension to “both the ongoing and anticipated impact of patent expirations across their businesses as well as greater than expected delays in new product launches as a result of unanticipated delays in FDA approvals.”

As these factors are having “a greater impact than anticipated in its previous financial guidance,” WebMD lowered its expectations for sales commitments and revenue for the balance of 2012.

On the bright side, traffic to the WebMD Health Network during the second quarter grew, reaching an average of 106.9 million unique users per month and 2.5 billion page views for the quarter, increases of 29% and 25%, respectively, from the prior year period. (Those comparisons exclude traffic from WebMD's former affiliate partner sites, which were phased out at the end of 2011.)